Case BL: E_Gongsu MM recently announced a pre-increase in annual results for 2023. It is expected to achieve net profit of 6.30 to 750 million yuan in 2023, an increase of 34.65% to 60.30% over the previous year; net profit deducted from non-return to mother of 3.60 to 450 million yuan, an increase of 10.15% to 37.68% year on year; changes in non-recurring profit and loss are mainly due to an increase in the fair value of the company's investment company Huafeng Technology. The fourth quarter is expected to achieve net profit of 1.51 to 271 million yuan, or -37.4% to +12.2% year over year, and -45.3% to -1.9% month on month. The company's net profit to mother grew rapidly in 2023; profit declined month-on-month in the fourth quarter, which is expected to be mainly due to bad debts due to accounts receivable accrued.
Reduced costs and increased efficiency+overseas expansion, and business performance achieved steady growth. During the reporting period, the company's home appliance business and general equipment manufacturing business actively grasped favorable factors such as falling shipping charges and falling commodity prices, and achieved good operating results through measures such as order grabbing, product line collaboration, refined management, efficiency improvement, and revenue and cost reduction. Demand picked up after overseas markets were de-inventoried. According to data from the General Administration of Customs, in 2023, China exported about 3.72 billion units of electrical appliances, YoY +11.2%, with an export value of US$87.78 billion and YoY +3.8%. The company accelerates overseas brand building by continuously optimizing the product structure, giving full play to the collaborative advantages of the supply chain and domestic and foreign sales, and accelerating channel development. The “one country, one policy” tailors market strategies, continuously enhances overseas popularity, and helps the company's performance grow.
Adopt advanced technology to strengthen the brand's “technology label” and continuously enhance the differentiated competitiveness of products. In the context of the trend of larger screens and high-end color TVs, the company continues to improve its product capabilities with industry-leading multi-modal integrated interaction technology, screen projection technology, and AI image recognition and processing technology, forming a differentiated competitive advantage. In 2023, the company released the Q9KMAX pilot version of the first 8K high-brush mini-LED TV in China, the first ultra-high brush TV ultra-feather speed series supporting a full 288Hz display in China, the world's first LEDARTIST Starfoil TV with 20,000+ zoning mini, and the world's first “Changhong Super Brain” TV. In other fields such as refrigerators, washing machines, air conditioners, etc., the company released products such as “M Xiansheng” series refrigerators, Changhong Double Wing Air Conditioner Q7V hangers, such as hand washing series washing machines, and in-vehicle DC compressors, etc., to vigorously develop new smart products, and continuously upgrade and iterate the products.
Profit forecast: Sichuan Changhong is the world's leading comprehensive group enterprise. It is optimistic that the company will continue to improve its profitability through overseas and high-end market expansion. The company is expected to achieve revenue of 978.03/1047.87/112.889 billion yuan in 2023-2025, and achieve net profit of 697/8.89/1,112 billion yuan, corresponding to EPS of 0.15/0.19/0.24 yuan, maintaining a “buy” rating.
Risk warning: Slowing economic growth, weak demand, supply chain risks, exchange rate fluctuations.